The Constitutional Court Ruling on Labour Brokers may mistakenly have created the perception that all clients of labour brokers become the sole employer of employees who earn below R205 433.30 per annum after three months.

Whilst we take no issue with this point, nevertheless it is important for companies that are members of one of the  21 Employer Associations affiliated to SEIFSA to understand that, as members of Employer Associations affiliated to SEIFSA which are party to the 2017-2020 Metal and Engineering Industry Collective Main Agreement concluded last year and adopted as a collective agreement concluded in a bargaining council, nothing has changed. For them, it is business as usual.

Attention is drawn to the following key points of the Judgment:

  1. Section 198A of the Labour Relations Act does not apply to labour broker employees who earn in excess of the earnings threshold (currently R205 433.30 per annum).
  2. The deeming provision contained in section 198A (3)(b)(i) of the LRA is only triggered if the labour broker employee is not performing a temporary service.  A temporary service means work for a client by an employee:
    1. For a period not exceeding three (3) months;
    2. As a substitute for an employee of a client who is temporarily absent; or
    3. In a category of work for any period of time which is determined to be a temporary service by a collective agreement concluded in a bargaining council, a sectoral determination or a notice published by the Minister.

The 2017-2020 Consolidated Main Agreement, which has since been adopted as an industry agreement concluded in a bargaining council, in terms of section 31 of the Labour Relations Act, specifically addresses the relationship between labour brokers and their clients. Clause 20 of the Main Agreement permits the contracting of employees to a client via a labour broker for reasons related to site work, turnaround work, ship-repair work and short-term fluctuations in workload linked to time or the completion of the specific work, project or job detailed in the contract.

  1. If a placed employee is performing a temporary service (as defined above), the labour broker will, for as long as the placed employee performs a temporary service, remain the employer in terms of the LRA.
  2. The deeming provision provided for in s 198A (3) (b) (i) of the LRA is limited to theLabour Relations Act only.  If the s 198A deeming provision is triggered, it does not mean, by way of an example, that the client also becomes the employer for the purposes of the BCEA, SDL and COIDA.
  3. If a placed employee is deemed to be an employee of the client, he/she must be treated on the whole not less favourably than an employee of the client performing the same or similar work, unless there is a justifiable reason for different treatment (this has been in place since 1 January 2015).

The MEIBC Main Agreement has never differentiated between the labour broker’s employees and permanent or temporary employees of a client;  when it comes to terms and conditions of employment, both are treated in exactly the same manner.

  1. If section 198A (3)(b)(i) of the Labour Relations Act is triggered, the client of the labour broker becomes the sole employer of the placed employee. This is for the purposes of the LRA only.
  2. According to the Constitutional Court, there will be what is referred to as a triangular relationship.  There is no “transfer to a new employment relationship, but rather a change in the statutory attribution of responsibility as the employer within the same triangular employment relationship.The triangular relationship then continues for as long as the commercial contract between the TES and the client remains in force and requires the TES to remunerate the workers.”
  3. Even with the sole employer interpretation, “a placed employee will retain the right to claim against a Temporary Employment Service (TES) through section 198(4A) to the extent that they are still remunerated by the TES. The employee is largely protected against the TES regardless of whether the claim is made against an employer. But this liability relates only to claims brought by the employee. The protections afforded by the sole employer interpretation go beyond this. They give employees certainty and security of employment.”

As long as an employer is a member of one of the 21-affiliated Employer Associations which signed the 2017-2020 Metal and Engineering Industry Main Agreement and is utilizing the services of a Labour Broker or TES which is a member of the Labour Broking Division (LBD) of the Constructional Engineering Association of SA (CEA),the exclusion principle continues to apply.

To join an Employer Association federated to SEIFSA, please call Ms Theresa Crowley on (011) 298-9419 or emailtheresa@seifsa.co.za.To contract with a Labour Broker or TES which is a member of the LBD or to join the Labour Broking Division of the CEA, please email Ms Christa Smith on christa@associationadministrator.co.za